A great wireless leap forward

Unlimited talk and data plans seen igniting cell-phone growth

By

ChrisPummer

SAN FRANCISCO (MarketWatch) -- As the largest U.S. cell-phone companies, AT&T and Verizon recently bowed to mounting pressure from feisty regional carriers in introducing "unlimited talk," albeit for a pricier $99.99 a month.

To one-up its larger counterparts, No. 3 Sprint responded by introducing an unlimited talk and data package for the same $99.99 price. Some analysts say "The Simply Everything Plan" will prove to be the industry's biggest growth catalyst since the dawn of flat-rate calling plans

"Consumers avoid these services because they want to know how much they'll pay at the end of each month," says Jeff Kagan, a Marietta, Ga.-based telecom analyst. "No longer fearing extra costs, of any kind, is going to drive real change in the marketplace."

Adds Insight Research President Robert Rosenberg: "Our wireless is a device-specific industry not a household-product one like cable TV. That's what's going to change."

For its part, No. 4 T-Mobile launched a $99.99 unlimited talk and messaging plan offering fewer features than Sprint's but more than AT&T's and Verizon's.
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Since October 2006, T-Mobile has heavily promoted a limited, unlimited-calling option with its "My Favs" plan that permits unlimited calling to five specific phone numbers.

The "unlimited minutes" model isn't new -- regional carriers Dallas-based MetroPCS and Ridgeland, Miss.-based Cellular South employ it on a sharply discounted basis to draw customers who seldom "roam." And Sprint's unlimited calls and data plan would yield savings for less than 15% of today's U.S. users -- given the average monthly bill nationwide is about $54.

Still, Kagan sees the advent of all-inclusive packages as the industry's "third wave" following AT&T's
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introduction of flat-rate minute packages and the launch of the data services now being bundle-priced. Such plans are expected to be especially attractive to younger users who may shell out more for the peace-of-mind of a fixed-price menu of features many long to tap at will.

With today's a la carte data rates, "you could be a Ph.D. economist with time on your hands and, even then, I'm not sure you can decrypt these charges," Rosenberg says. "Carriers made them obscure intentionally because it's not to their benefit to have straight-up comparisons."

Same bill every month

Like earlier minute bundles, Sprint's everything package is aimed at relieving anxiety and confusion about monthly costs, and at users who will "pay a bit more to save a lot on everything," Rosenberg says.

"These plans are offering a little more predictably," says Consumers Union Senior Counsel Chris Murray, who testified to Congress in late February on an industry-reform bill. "I just hope package prices keep coming down, because it's still not as competitive a picture as the biggest wireless carriers like to paint."

Right now, a la carte fees can push an individual's monthly bill over $200, says Kent German, CNET.com senior editor for cell-phone reviews. Apple
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addressed that in debuting its iPhone with a $69.99-a-month unlimited-data offering, German says, but that didn't include unlimited talk.

Sprint's
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pricing plan, which includes an $89.99-a-month unlimited-talk-only option, is aimed for the moment at heavy users, German says. "It's really designed for power users who don't want to be constrained.

"Data usage gets so addictive, going to the Web, syncing your calendar, sending multimedia messages. You can see on your phone how many minutes you've used, but data is a lot more difficult to track between time of usage and megabytes."

What to choose

Offering consumers another pricing option makes the already involved process of choosing among different plans even more trying. Here's what telecom experts say consumers should consider in weighing unlimited plans:

Cost benefit to retiring a land-line. Cellular South found many of its customers canceled hard-wire lines since debuting its unlimited-talk plan, Kagan says. Families probably should keep land lines, he says, because they are the means to reach everyone in a household at one number.

Best-suited to individual customers. Unlike flat-rate plans where monthly minutes are shared by multiple phones, Sprint & T-Mobiles unlimited-use plans don't extend service to additional phones for free or a minimal monthly charge since each user could run up extensive minutes. In Sprint's case, a second phone on its "everything" plan costs $94.99 a month and a third, $84.99. T-Mobile offers no additional-phone discounts.

People whose monthly bills average $85 to $100 could view a $99.99 plan as insurance against cost overruns. "If your bill usually runs within $15 of the unlimited pricing plan, it could make sense to consider them," says Jerry Kaufman president of Dallas-based consulting firm Alexander Resources.

A package of minutes is plenty sufficient for most users. T-Mobile offers a 1,000-minute monthly package for $59.99 that German says still suits the vast majority of users' needs. "A lot of people might get an unlimited plan because it seems like a great deal and never use anywhere near the time that would justify the added cost."

A home-office land-line replacement. If you're spending $35 on a wired line for your home office and another $50 or $60 for cellular, consider dropping the former and using just a single cell-phone for your business.

Be sure to shop the regionals. As long as you don't travel often, Rosenberg suggests getting a less-costly unlimited talk plan from a low-cost regional carrier, many of which don't require long-term contracts. "The little guys still set the price and the larger carriers follow."

Consider T-Mobile's At-Home Service. For an additional $10-a-month, your cell phone will work over a Wi-Fi broadband connection in your home. As a result, you can get unlimited usage when calling from home base.

Ultimately, the foremost consideration remains the range and quality of coverage with a given carrier. Says Kagan: "Who's going to give you the best-quality calls at your home and office? If you don't have great coverage where you are, unlimited service won't make up for that."

Chris Pummer is a former senior editor for MarketWatch and Bloomberg News and a reporter for such papers as the Los Angeles Times and San Jose Mercury News.

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